Growth is accelerating in many emerging markets; however, the economic return for people or even the improvement of their economic conditions is subject to a complex equation filled with many variables. Therefore, the feeling of economic well-being requires much more effort than just economic growth and the size of the gross domestic product (GDP).
Goldman Sachs has predicted that Saudis will become the highest earners globally outside advanced markets, estimating that per capita GDP could reach about $120,000 by the year 2075 among the 122 economies included in the report. Per capita GDP is certainly a measure of a country's economic output divided by its total population, often used as an indicator of the standard of living and economic development in a country.
However, it is important to note that per capita GDP does not take into account factors such as income inequality, access to healthcare and education, and environmental sustainability, all of which can affect the well-being of a country's citizens. Additionally, per capita GDP can be influenced by various factors such as changes in population growth, productivity, and technological advancements, which can lead to changes in a country’s economic performance over time.
Thus, while per capita GDP can provide insights into a country’s economic performance, it should be used in conjunction with other measures to get a more complete picture of overall national welfare. According to the report, there are several factors that can contribute to the economic performance of emerging market economies (EM). One of these factors is the potential for higher profit growth in emerging markets, which could lead to higher valuations of emerging market stocks.
However, the report also indicates that profit growth in emerging markets has failed to keep pace with superior GDP performance over the past decade, although emerging market profits have remained significantly superior over the long term. Other factors that can contribute to the economic performance of emerging countries include political stability, access to capital, infrastructure development, and technological progress.
Moreover, trends in financial markets and investor sentiment can also play a role in the performance of emerging economies. Therefore, while there are many factors that can contribute to the economic performance of emerging stocks, it is important to note that each country is unique and may face different challenges and opportunities.
